Unlocking Innovation The Role of Market Research in Identifying Unmet Needs and Driving Product Development

1. ARROWPOINT-MARKET RESEARCH AND INSIGHT SOLUTIONS Unlocking Innovation: The Role of Market Research in Identifying Unmet Needs and Driving Product Development

2. Antenatal Stage – Identifying Requirements Numerous corporations acknowledge the significance of novelty, hence dedicating substantial resources to research and development (R&D). While electronics firms might allocate up to 15% of their sales to R&D to keep up with their rapidly evolving sector, most companies typically spend between 2% and 5% of their sales on R&D—a considerable amount even for industry giants like Boeing, Honda, or Siemens. Surprisingly, over 90% of successful innovations originate from initial missteps and not from meticulous market research. Examples abound, from the accidental discoveries of the telephone and X-rays to the serendipitous inventions of bubble gum, Velcro, Viagra, and Post-it notes. The latter, for instance, emerged when a 3M researcher sought to create an exceptional glue but ended up with one that hardly adhered, ultimately birthing one of 3M's most triumphant products—the ubiquitous Post-it notes. However, not all breakthroughs occur by chance, as market research can identify the necessity for many innovations. Drucker (1993) recounts the tale of William Conner, a medical salesman turned entrepreneur, who embarked on a quest for new product opportunities. Conner's approach involved engaging with surgeons to understand their challenges firsthand. Through these interactions, Conner unearthed a significant hurdle in cataract surgery: the need to cut a ligament, a risky and unpleasant task for physicians. Conner's subsequent discovery of an enzyme capable of dissolving this ligament, along with a method for preserving it until needed during surgery, proved transformative. His innovation not only met an unaddressed need but also led to patenting his compound, illustrating the vital role of market research in identifying and capitalizing on market opportunities.

3. In the scenario of cataract surgery, market research offered invaluable insights into unmet needs and a comprehensive understanding of the sales environment for the new product. Nonetheless, it's essential to approach market research expectations with caution, as it's not guaranteed that conducting market research will unveil significant opportunities or lead directly to the creation and launch of new products. Instead, it falls upon the researcher to leverage their understanding of market needs to identify potential applications for new products that address those needs effectively. The market itself cannot dictate what the new product should be, nor can market research respondents assume the role of an R&D Director.

4. Moreover, it's unrealistic to view market research as an exact science, as expecting researchers to accurately predict the demand for a new concept would be impractical. There are numerous variables beyond the scope of market researchers that can influence demand, making precise predictions challenging. The process of bringing a product to market and establishing its presence takes considerable time, let alone gaining widespread acceptance. Market research should be approached as an experimental process, one that may yield unexpected results if not conducted under appropriate conditions. For instance, Xerox's experience with launching a copier illustrates this point. Despite the advice of two consultants against its launch and conservative sales forecasts from the third, Xerox proceeded and achieved remarkable success, installing 80,000 machines within three years. This discrepancy highlights how market research can underestimate demand, particularly when respondents lack experience with the new product being evaluated. Innovations that require users to embrace something novel, often involving a shift in mindset, pose additional challenges for research. In such cases, asking potential buyers or users in interviews or focus groups to imagine using the product and gauge their likelihood of purchase or willingness to pay can be ineffective. Without adequate time to fully comprehend the product or possibly trial it in its intended environment, respondents may struggle to provide meaningful feedback. For example, envisioning people's reactions to the concept of a portable music player like the Sony Walkman before its launch would have been difficult, potentially leading to misconceptions or negative perceptions.

5. However, market research can delve into the underlying needs of the market and assess how well a new product addresses these needs. Therefore, it is the researcher, rather than solely the potential buyer or user, who establishes the link between unmet needs and opportunities for new product development. • Key inquiries that should be included in any concept screening research are as follows: • - Is the purpose of the concept clear, and can potential users be convinced of the product's benefits? (This evaluates the clarity and purposefulness of the offering.) • - Does the product fulfill a need? What are the specific requirements of potential users? (This examines the demand for the product.) • - How do people currently utilize existing products? (This sheds light on purchasing behaviors regarding existing products.) • - What challenges do users encounter with existing products, and what needs are not being addressed? How satisfied are users with these products and their providers? (This identifies market gaps.) • - Is the price justifiable considering the perceived benefits of the concept? (This assesses whether people are willing to pay a reasonable price for the new product.) • - How likely are potential users to purchase the product? (This gauges purchase intent, providing insight into the number of people likely to buy the new product—initially, as this may be influenced by promotional efforts.)

6. Companies can sometimes fall into the trap of believing they already possess all the necessary answers. This was evident in the case of Sony, which failed to conduct sufficient market research before launching its e-Villa Internet appliance. This product aimed to provide consumers with internet access in their kitchens, but its substantial weight of nearly 32 pounds and size of 16 inches made it impractical. Consequently, the product was withdrawn from the market after just three months. With more extensive market research, Sony could have potentially saved significant resources—both financial and human—during the product development and commercialization process. Another crucial consideration during the pre-launch phase is that it's not just the product itself that needs to be perfected; all surrounding elements, such as packaging, services (e.g., technical support), and marketing, must also be meticulously planned. The design, coordination, and commercialization of these components can often span several years, especially for industrial innovations, which are known to take decades to fully establish. For example, carbon fibers, discovered in 1965 and produced in the 1970s, took approximately 20 years to make a significant impact. Indeed, it requires time for consumers to become aware of a new product, recognize its benefits, and adopt its usage. The innovation adoption curve, as illustrated by Rogers (1995) in Figure 2, depicts the changing number of new adopters of a product over time, across different stages of the product lifecycle. The curve begins with innovators, the earliest users who embrace change, followed by early adopters who also welcome new ideas but are typically more cautious. Subsequently, the early majority adopts the product, accepting change sooner than the average consumer, while the skeptical late majority follows suit only when the majority does. Finally, traditionalist laggards, who are critical of new concepts, only adopt new products once they become mainstream.